Penny-wise, coin foolish: Don’t eliminate 1 cent
This is the time of year when the U.S. Mint will be announcing how expensive it is to coin a penny. Last year’s news wasn’t soothing, with the cost of producing a penny rising to 1.5 cents in the fiscal year that ended Sept.30, an increase from 1.43 cents in 2015. To be sure, the nickel costs more to coin than it costs, and only the dime and quarter make money for the feds. My concern is that the number of members of Congress wanting to toss the penny will grow.
It’s only the latest concern about legal tender in the nation. But there’s still a place for the penny. First, a little history: During the American Revolution, money in the revolting colonies was a mess. Although the Continental Congress in 1781 adopted the dollar as the basic unit of money, there still was much reckoning in terms of the British pound, shillings and pence — and some other foreign coins.
On their own initiative, colonies decided to make their own money, even copper coins. Add to that the policy of British spies introducing counterfeit copper coins, and the result was a massive inflation rate as high as 400 percent. Little wonder that Americans often shunned money altogether and bartered goods with one another to effect purchases and sales of products.
By the time George Washington was inaugurated in 1789, high copper prices made it difficult to mint small-denomination coins that would permit accurate pricing of goods. Worse, because GW had two Cabinet members who were highly talented but ideologically opposed, Alexander Hamilton as secretary of the Treasury (to whom Washington deferred more often) and Thomas Jefferson as secretary of state, he tried to mitigate some animosities between the two by giving Jefferson control of the first Mint. That left Hamilton out of a critical decision-making process in his own field of expertise.
Still, by 1792, Hamilton got his way with the passage of the Coinage Act, which brought into existence coins running the entire gamut of the dollar: half-dollar, quarter-dollar, disme (later contracted to dime), half-disme, cent and half-cent. Hamilton believed these many coins would not only bring Americans into the economy but especially aid the poor “by enabling them to purchase small portions and at a more reasonable rate the necessaries of which they stand in need.” He also insisted that the coins be ornate in design so as to prevent counterfeiting. And federal government budgeting and spending were required to be listed to the exact penny (a practice, sadly, that’s been eliminated).
In 1857 the half-cent was eliminated, and in 1866 the half-disme was transformed into a five-cent piece. As time went on, controversy over how much valuable metals be put into these coins accelerated because of high minting costs. The last bastion of debate is, not surprisingly, the penny. Yet polls have indicated that even though Canada has phased out its penny, Americans are resistant, fearing that it would result in rounding up prices. Americans for Common Cents, a Washingtonbased think-coin tank, is committed to supporting the penny.
To be sure, Hamilton’s exacting coinage system has a relevance today for Congress, as illustrated by attempts over recent years to effect the One-Cent Solution, namely, that the federal budget be cut each year by a penny per dollar allocated, an effort that could lead to real deficit reduction. Unfortunately, there is still the Internal Revenue Service that pays no heed to the penny or, for that matter, anything less than 50 cents, permitting the taxpayer to round down to the nearest dollar, or anything 50 cents or more, permitting a rounding up. What is worse, if the taxpayer chooses to use exact figures instead of rounded ones, he’ll have to mail in his return, as most software programs won’t work. Whether the government or taxpayer benefits from this scheme hasn’t been the subject of major research, but it should be.
If the penny were eliminated, that 99-cent food purchased at the supermarket wouldn’t revert to 95 cents but to a buck. And no more would the consumer be able to buy 10 gallons of gasoline at $2.599 per gallon for $25.99. It would be $26.
Even in our widely held adages, the penny holds a special place. And if we were to eliminate it, we’d have to toss aside a few of the terms of endearment enshrining the penny. A few examples: “A penny saved is a penny earned.” In other words, it’s like getting paid for doing nothing.
The best way to overcome any predilection to gamble one’s life away is to play “penny-ante” That is, bet only small sums.
We admire a “penny-pincher” for trying to save money.
We try to induce conversation by offering “a penny for one’s thoughts.”
We modestly induce proffering low-cost opinion with our “two cents worth.”
And even if we aren’t happy when someone spends too much, we can soften the blow by referencing the cost as a “pretty penny.”
Besides, we save our harshest critiques for the non-penny coins, about which there’s very little to be said that’s good. That’s why there’s universal loathing for someone who tries to “nickel-and-dime” us.